Cst / vat for different sales

Hi ,

BACKGROUND :: My company (registered in Delhi) gets certain gift items produced (vendor is also based in delhi) according to our designs. We sell these products right now in Delhi and Gurgaon. We now have enquiries from Kolkata, Bangalore, Mumbai, Hyderabad and Chennai. I am told every state has different rules when we are to sell our products in those states. In our case it will be Tamil Nadu, Andhra, Karnataka and maharashtra. we are already doing interstate sales with Haryana. I have a TIN number issued to me by Delhi Authority.

There are two types of sales we do. Customised products that we get made for our clients where the client is also the end consumer (ie the godds are not sold further). The second kind of sale is to retailers who then sell it after adding a margin.

There are two types of bills i raise (as instructed by my accountant), a retail bill and tax invoice. whenever my sale is in delhi and the dealer is a registered I raise a tax invoice. for everyone else i raise a retail invoice.

QUERIES :: My questions are as follows.

1. For interstate sales if the retailer does an outright purchase what taxes do i have to charge in my invoice. If the retailer takes the goods on consignment (ie whatever sells will get paid for at the end of the month) will the tax applied change.

2. All my goods go by courier, so do i need to pay any other taxes or submit any forms along with the courier.

3. Does the dealer who "imports" my goods into his state have to send me any forms.

4. In an interstate sale to a retailer can the retailer claim input tax credit in eitehr of the cases ie if he buys it on outright purchase or on consignment.

5. I charge 12.5 % tax on my asle to the retailer and if he charges another 12.5% tax in his state the consumer ends up paying 25% more. Is there a way that this "tax burden" be reduced, it also means more sales for us.

6. Finally I get my goods produced to my specifications and design by a vendor. Does that make me a manufacturer or trader. The vendor makes these goods exclusively for me. Do I get any incentives incase I am a manufacturer. Are there any incentives in taxes for women entrprenuers.

Thanking you all in advance.

Okay, first of all interstate sales are not "imports". Its confusing when you use wrong terminology.

I will try and answer to all your queries but you really should see a practising Chartered Accountant if you don't want to get tangled in the really wide tax net and concentrate on expanding your business.

1. I think by outright purchase you mean purchases with payment at the time of delivery or before that.

There is no difference whatsoever in the tax rates whether you sale on cash or credit. You'd have to charge CST(Central Sales Tax) @ 2% for sale to registered dealers in the invoice in both cases.

2. You need not pay any other taxes. Your courier will handle that. Just hand over a copy of invoice with your goods to the courier

3. Yes, the dealer purchasing your goods shall provide you with C forms for the purchases made @ the concessional rate of 2%

4. No dealer can claim Input Tax Credit of CST in any case. Unlike VAT credit for CST isn't available.

5. First of all you wont charge 12.5% for sale to registered dealers and second of all Input Tax credit(not available in case of CST) takes care of the cascading effect of duties.

6. If you excercise full control and supervision on the job worker, (which I think you do as the goods are being made by job worker exclusively for you) you are a manufacturer

You do not get nay incentives but you'll have to get yourself reistered with Excise authorities in case the goods are excisable. Also labelling, re-labelling, packing and repacking also amount to manufacture for goods mentioned in third schedule of CETA i.e. MRP based goods.

No tax incentives for women entrupneurs except the limit specified in IT ACT

I hope it'll answer your queries